Published: Sunday, December 1, 2013 at 10:42 p.m.

Last Modified: Sunday, December 1, 2013 at 10:42 p.m.

A year after Paradise Homes abruptly shut its doors, nearly two dozen of its customers are still trying to collect damages from Schroeder-Manatee Ranch, the master developer of Lakewood Ranch.

But a Manatee judge recently sided with SMR on several key points in a lawsuit filed by the home buyers, which claims the developer failed to adequately vet Paradise before awarding it “approved builder” status in the master planned community.

Though the judge dismissed claims of negligence against SMR, a plaintiffs' attorney noted those same allegations could be included in amended complaints, should they be refiled.

The buyers also must now file separate statements of claims and spell out details of alleged misrepresentations by the developer.

“It's a hurdle, but not an obstacle,” said Alan Tannenbaum, the plaintiffs' attorney.

When Paradise filed for bankruptcy a year ago, it left customers — most of whom had bought homes in Lakewood Ranch — with homes that were not started or only partially completed.

It took Paradise customers Don and Bonnie Staley until September to move into their new home in the Royal Valley neighborhood of Lakewood Ranch's Country Club East.

After Paradise failed even to break ground on their lot, the couple hired custom builder John Cannon Homes to construct their house, said Don Staley.

He figures the couple lost more than $130,000 to the defunct builder. Now, he's hoping to recover some money through the lawsuit.

“I wrote it off a year ago,” Staley said. “But it would be nice to get some payments.”

Of the 22 home buyers suing SMR, at least half of them suffered six-figure losses, with some out more than $200,000, Tannenbaum said.

Most of them, like the Staleys, had to pay other builders to complete their homes, as well as pay off subcontractors to remove liens, he added.

“Some of them are still trying to resolve liens on their property,” Tannenbaum said. “We still don't understand why SMR won't step up the plate and resolve these claims.”

For its part, SMR blames Paradise and its owner, Jim Butler, for “mismanagement” that contributed to the builder's demise and the problems customers have since faced.

SMR attorney A. Lamar Matthews says Paradise is responsible because it, and not the developer, had the contractual relationships with the home buyers.

“We think, legally, it's a stretch to have someone who is not a party be responsible when something goes wrong,” Matthews said.

Paradise's demise represents a rare black eye for Lakewood Ranch, an 8,500-acre community that has dominated the region's real estate market and garnered acclaim nationwide.

In all, more than 8,000 houses and condominium units have been built there.

Butler, meanwhile, has lost more than his company. Northern Trust Bank foreclosed on his six-bedroom home in The Oaks, in Osprey, after he failed to make payments on a $1.1 million loan. The bank took control of the home at a foreclosure auction in mid-October.

Butler, who could not be reached for comment, did not contest the foreclosure, and Northern Trust received a default judgment.

Meanwhile, Extreme Remodelers, Paradise's parent, remains an active bankruptcy case. Court filings show an estimated $1.2 million in assets and $2.6 million in liability claims, mostly from the company's unsecured creditors.

The bankruptcy trustee in the case wants to sell some property — furniture, tools, materials, office equipment and the like — from Paradise's former headquarters in Venice.

Despite the objections of several creditors who said they may have claims on those assets, a federal judge has approved the sale, court records show.

Paradise's decline and Butler's own fall from grace was swift at Lakewood Ranch, where the builder was once a sales leader in the community's tony Country Club East development.

That was no easy feat: Just getting into Lakewood Ranch, which prides itself on its select roster of approved builders that have met “rigorous standards” set by the developer, has kept some contractors out.

Paradise began building there in 2010, even though Butler later admitted in Extreme Remodelers' bankruptcy case that the builder was a new company with no financial track record.

“He admitted that they never asked him for financial statements because it was a start-up,” Tannenbaum said.

The attorney also says Paradise used general contractor Kirk Blackburn as the qualifier for construction. Blackburn, who lived in Palm Harbor at the time, had earlier been convicted of grand theft.

Butler told creditors at a bankruptcy meeting that he paid Blackburn $1,000 a month to use his license, and that Blackburn visited homes under construction twice a year, Tannenbaum said.

In a letter to home buyers just before Paradise shut down in October 2012, Butler said he priced his homes with too-thin margins and became burdened with overhead from sales and marketing, along with rising costs for materials and labor.

Tannenbaum also contends that Butler channeled funds from Paradise into the Viking Culinary Center, a now-closed cooking school in Lakewood Ranch that rented space on SMR's highly successful and visible Main Street.

“That gave SMR more incentive to push Paradise over everybody else,” Tannenbaum said. “It was an undisclosed conflict of interest.”

Matthews counters that SMR had no obligation to track the pace of construction at homes or when lenders or others paid subcontractors for work.

The 22 home buyers sued SMR in March in Manatee Circuit Court. SMR filed defensive motions, and Circuit Judge Diana Moreland has ruled for the developer on several counts, including the negligence allegation.

As a result, the buyers will now have to file separate statements of claims rather than group them together. They also will have to provide more details to support their claims under the Florida Deceptive and Unfair Trade Practices Act.

Moreland dismissed the negligence claim after SMR argued that it was not required to take actions that would have prevented the risk posed by Paradise's own mismanagement.

That motion was granted without prejudice, which allows it to be refiled in any amended complaints.

<p>A year after Paradise Homes abruptly shut its doors, nearly two dozen of its customers are still trying to collect damages from Schroeder-Manatee Ranch, the master developer of Lakewood Ranch.</p><p>But a Manatee judge recently sided with SMR on several key points in a lawsuit filed by the home buyers, which claims the developer failed to adequately vet Paradise before awarding it “approved builder” status in the master planned community.</p><p>Though the judge dismissed claims of negligence against SMR, a plaintiffs' attorney noted those same allegations could be included in amended complaints, should they be refiled.</p><p>The buyers also must now file separate statements of claims and spell out details of alleged misrepresentations by the developer.</p><p>“It's a hurdle, but not an obstacle,” said Alan Tannenbaum, the plaintiffs' attorney.</p><p>When Paradise filed for bankruptcy a year ago, it left customers — most of whom had bought homes in Lakewood Ranch — with homes that were not started or only partially completed.</p><p>It took Paradise customers Don and Bonnie Staley until September to move into their new home in the Royal Valley neighborhood of Lakewood Ranch's Country Club East. </p><p>After Paradise failed even to break ground on their lot, the couple hired custom builder John Cannon Homes to construct their house, said Don Staley.</p><p>He figures the couple lost more than $130,000 to the defunct builder. Now, he's hoping to recover some money through the lawsuit.</p><p>“I wrote it off a year ago,” Staley said. “But it would be nice to get some payments.”</p><p>Of the 22 home buyers suing SMR, at least half of them suffered six-figure losses, with some out more than $200,000, Tannenbaum said.</p><p>Most of them, like the Staleys, had to pay other builders to complete their homes, as well as pay off subcontractors to remove liens, he added.</p><p>“Some of them are still trying to resolve liens on their property,” Tannenbaum said. “We still don't understand why SMR won't step up the plate and resolve these claims.”</p><p>For its part, SMR blames Paradise and its owner, Jim Butler, for “mismanagement” that contributed to the builder's demise and the problems customers have since faced.</p><p>SMR attorney A. Lamar Matthews says Paradise is responsible because it, and not the developer, had the contractual relationships with the home buyers.</p><p>“We think, legally, it's a stretch to have someone who is not a party be responsible when something goes wrong,” Matthews said.</p><p>Paradise's demise represents a rare black eye for Lakewood Ranch, an 8,500-acre community that has dominated the region's real estate market and garnered acclaim nationwide. </p><p>In all, more than 8,000 houses and condominium units have been built there.</p><p>Butler, meanwhile, has lost more than his company. Northern Trust Bank foreclosed on his six-bedroom home in The Oaks, in Osprey, after he failed to make payments on a $1.1 million loan. The bank took control of the home at a foreclosure auction in mid-October.</p><p>Butler, who could not be reached for comment, did not contest the foreclosure, and Northern Trust received a default judgment.</p><p>Meanwhile, Extreme Remodelers, Paradise's parent, remains an active bankruptcy case. Court filings show an estimated $1.2 million in assets and $2.6 million in liability claims, mostly from the company's unsecured creditors.</p><p>The bankruptcy trustee in the case wants to sell some property — furniture, tools, materials, office equipment and the like — from Paradise's former headquarters in Venice.</p><p>Despite the objections of several creditors who said they may have claims on those assets, a federal judge has approved the sale, court records show.</p><p>Paradise's decline and Butler's own fall from grace was swift at Lakewood Ranch, where the builder was once a sales leader in the community's tony Country Club East development.</p><p>That was no easy feat: Just getting into Lakewood Ranch, which prides itself on its select roster of approved builders that have met “rigorous standards” set by the developer, has kept some contractors out.</p><p>Paradise began building there in 2010, even though Butler later admitted in Extreme Remodelers' bankruptcy case that the builder was a new company with no financial track record.</p><p>“He admitted that they never asked him for financial statements because it was a start-up,” Tannenbaum said.</p><p>The attorney also says Paradise used general contractor Kirk Blackburn as the qualifier for construction. Blackburn, who lived in Palm Harbor at the time, had earlier been convicted of grand theft.</p><p>Butler told creditors at a bankruptcy meeting that he paid Blackburn $1,000 a month to use his license, and that Blackburn visited homes under construction twice a year, Tannenbaum said.</p><p>In a letter to home buyers just before Paradise shut down in October 2012, Butler said he priced his homes with too-thin margins and became burdened with overhead from sales and marketing, along with rising costs for materials and labor.</p><p>Tannenbaum also contends that Butler channeled funds from Paradise into the Viking Culinary Center, a now-closed cooking school in Lakewood Ranch that rented space on SMR's highly successful and visible Main Street.</p><p>“That gave SMR more incentive to push Paradise over everybody else,” Tannenbaum said. “It was an undisclosed conflict of interest.”</p><p>Matthews counters that SMR had no obligation to track the pace of construction at homes or when lenders or others paid subcontractors for work.</p><p>“They don't have a contractual relationship with Lakewood Ranch,” Matthews said. “They bought from builders.”</p><p>The 22 home buyers sued SMR in March in Manatee Circuit Court. SMR filed defensive motions, and Circuit Judge Diana Moreland has ruled for the developer on several counts, including the negligence allegation.</p><p>As a result, the buyers will now have to file separate statements of claims rather than group them together. They also will have to provide more details to support their claims under the Florida Deceptive and Unfair Trade Practices Act.</p><p>Moreland dismissed the negligence claim after SMR argued that it was not required to take actions that would have prevented the risk posed by Paradise's own mismanagement.</p><p>That motion was granted without prejudice, which allows it to be refiled in any amended complaints.</p>